Tuesday

Jan 29, 2019 at 1:29 PMJan 29, 2019 at 9:01 PM

Senate President Susan Wagle on Tuesday urged lawmakers to work with urgency to pass tax reform and test the governor's appetite for windfall legislation.

Wagle launched into hearings on Senate Bill 22 in a select committee she created to address the implications of federal tax code changes. The bill is projected to deliver $137 million in savings to corporations and $54 million to individuals.

The Wichita Republican said she expects her committee to hold three days of hearings on the bill and potentially send it to the full Senate on Thursday.

"Timing is very important to us, and tax certainty for individuals and businesses needs to happen here in Kansas," Wagle said. "I feel a sense of urgency on working the bill and finding out if the House is willing to work the bill and finding out if the governor is willing to sign it."

She wasn't sure if her plan would have enough support to override a veto from Gov. Laura Kelly, but she said there are misunderstandings about the fiscal impact of the bill and she plans to offer a competing assessment.

"You know, Laura Kelly is a former member of the Senate," Wagle said, "and she I'm sure is listening to the debate. She'll be following the debate, and I'm not so sure that she'll veto it."

Ashley All, the governor's spokeswoman, said the governor will review legislation to determine whether it is in the best interest of a state that is finally starting to dig out of a hole created by massive tax cuts favored by former Gov. Sam Brownback.

"It is critical that we focus on preserving this progress, stabilizing the budget and reinvesting in schools and roads," All said. "The governor was elected to rebuild this state, and she takes that responsibility very seriously."

Eric Stafford, lobbyist for the Kansas Chamber, and Ernst and Young executives Scott Roberti and Brian Liesmann offered testimony in support of disentangling state and federal code to take full advantage of relief offered in the plan signed by President Donald Trump in December 2017.

"The message I would like to get across," Stafford said, "is let's be clear that if this bill does not pass, that will be a tax increase on individuals and business in the state of Kansas."

Part of the bill would allow individuals in Kansas to itemize their state tax deductions even if they don't itemize on federal returns.

The more contentious part of the bill relates to a state tax on profits companies make overseas and bring back to the U.S. Wagle said she wanted to dispel the notion that big businesses are stashing money in a Swiss bank account.

"It appears to me they weren't hiding it," Wagle said. "They were paying taxes in the country where they were earning the profit, and they kept the money in that country because to bring back the money, there was additional, very high tax."

Roberti said the goal of lowering the federal tax rate on business from 35 to 21 percent was to put the country on a competitive playing field with countries that provided the shelter of lower tax rates.

"Companies are encouraged, obviously, to reinvest, innovate, build and sell to their customers," Roberti said. "They're not encouraged to put money in some bank account in some zero percent country and just let it sit there. That's not how business operates."

Under questioning from Holland, Roberti acknowledged he was retained by Pfizer to represent the pharmaceutical company before the Legislature. He couldn't tell Holland how much money businesses in Kansas will save from the federal tax cuts, how much Pfizer saved, or how much more Pfizer would save under the proposed legislation.

Absent a tax break, Roberti said, "one would have to consider whether operating here in Kansas versus operating in other states would be advantageous."

Sen. Vic Miller, D-Topeka, called for looking at the proposed legislation from a different perspective. He said the tax increase provided by current state code would be substantially smaller than the massive cuts installed by the federal plan.

"It's not a net increase by any stretch of the imagination," Miller said.

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